The outage was reported at about 6:30 a.m., PG&E spokeswoman Fiona Chan said.
The balloon struck the power line near Eaton Court and Eugene Street.
PG&E and the fire and police departments were responding.
Several intersections were without power or were in flashing red mode, according to police. Drivers were urged to be cautious while driving in the area and to expect minor delays.
Around 7:45 a.m., all but 100 customers had their power restored, Chan said. The remaining customers were expected to have their power restored by 10 a.m.